What Drives the Property Price-Trading Volume Correlation? Evidence from a Commercial Real Estate Market
Posted: 14 Jan 2005
The significant price-trading volume correlation found in the residential property market presents a challenge to the rational expectation hypothesis. Existing theories account for this fact with either capital market imperfection (down-payment effect or loss-aversion consideration) or imperfect information (search theoretic models). This paper employs data from a commercial real estate market, which face a different degree of severity of capital market constraint than the residential market, and thus provide an indirect but effective test for alternative theories. Policy implications are also discussed.
Keywords: Trading volume, housing price, search, captial market imperfection, different degree of severity
JEL Classification: R30, R31
Suggested Citation: Suggested Citation